Wins Financial (NASDAQ:WINS)
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SM&A (NASDAQ:WINS) announces open letter to SM&A stockholders on
strategy to enhance stockholder value.
Current Board Provides Specifics on Strategy to Enhance Stockholder
Value;
Myers Asks Stockholders to "Trust Me" With His Vague Plan - Choice
is Clear
Sign and return your White Card
supporting SM&A's Board.
May 8, 2008
To Our Stockholders:
This week saw the latest in a series of disingenuous statements from
former CEO Steven Myers about your company. It comes amid our
ongoing efforts to transition to a well-positioned, profit-driven
company focused on enhancing stockholder value from a tactically
driven company that for years enriched its CEO while producing
inadequate results for its stockholder and employees.
Today when we release our first-quarter earnings, we are prepared to
provide you with more specific details of our strategic plan.
-- The plan is designed to--and we are confident will--enhance
stockholder value. Financial targets which this plan supports have
already been established and were previously disclosed in our 2008
Proxy Statement.
-- We believe our investors will have the same reaction to this
plan that our employees did when it was presented at an off-site
conference in March. They fully embraced it. When presented, it
was met with a two-minute standing ovation.
-- As we will detail in our discussions, this strategy has already
produced positive results.
Myers has been quick to criticize our comprehensive strategic plan
without even knowing, understanding or asking about the details. He
has been away from the company for more than one year and is no
longer intimately familiar with the competitive focus under which we
operate, as it has evolved substantially. You would think a major
stockholder would at least want to understand the facts before
criticizing and disparaging the plans of your board and leadership
team.
But then, this behavior is not new for Myers - at least during
this proxy contest. He has shown a propensity for not letting the
facts get in his way - either in his criticism of your board and
leadership team or of his own past performance. Rather than own up
to the problems that were created under his watch, he would prefer
to have you ignore his past performance and instead ask you to
believe his vague promises of cost reductions, management
assessments/changes and operational changes.
It doesn't matter to Myers that your board and management were
saddled with problems created during his tenure. Myers says things
will be different now -- "trust me". Your board, our leadership team
and our employees have heard this before. We know Myers and his
leadership style well: his lack of strategic direction and the
self-serving activities which facilitated his departure
significantly harmed this company. We strongly believe that, based
on his past performance and the limited details of his ambiguous
plans, his taking control of the board would be damaging to the
company and stockholder value again. We also strongly believe that
Myers' return would trigger a loss of customers and that employee
departures would rise again, thereby nullifying our efforts over the
past six months to solidify both our customer and employee base.
As we brief our strategic plan today, we fully expect Myers to
criticize it again -- no matter what it says. After all, he has a
vested interest in doing so. To acknowledge its potential for
enhancing stockholder value would get in the way of his effort to
take control of the company.
We would ask that you judge for yourself. The webcast of our
earnings call will begin at 1:30 p.m. PDT today (Thursday, May 8,
2008), accessible at www.smawins.com
by clicking on the investor relations tab and selecting the
webcast link. A replay of the conference call will be available at www.smawins.com
or by dialing 800-405-2236 or 303-590-3000, reference access code
11113199#.
After you hear what we have to say, we would then ask you to compare
our strategy to Myers' "approach." Some of his approach has already
been instituted, some of it in our opinion is unnecessary and some
is already included and implemented in our plan. Myer's should
provide answers to the following:
-- Myers claims he will raise the stock price, but won't say how.
Why didn't he raise the stock price when he was here? What happened
in 2004, 2005 and 2006?
-- He conveniently ignores industry, economic and current market
conditions that have hurt all companies, yours included.
-- He also won't, or can't, reconcile his promise of a higher stock
price with his long history of disastrous share price performances,
including overseeing a plunge from more than $32 a share to 62 cents
that led to a de-listing of the company.
-- Myers continues to conveniently ignore the legacy of problems
with which he saddled the company and which were inherited by the
current new management team. Instead, he blames the current board
and new management for the consequences of those problems without
acknowledging the time needed to take corrective action.
-- Myers has yet to explain how he can override unambiguous
accounting rules to change the treatment of an acquisition he
approved.
-- Myers has yet to reconcile his long history of profligate
spending on his own salary and flying jets through a company he
co-owned with his sudden, new-found desire to contain costs.
-- If Myers' effort is not a de facto takeover effort so he can run
the company again, why does he take an uncompromising,
all-or-nothing position in which he will only be satisfied when he
and all three of his friends replace four highly qualified,
independent directors? Is there any serious doubt that it is Myers
who wants to again run your company?
Make no mistake: this is a de facto takeover attempt by Myers to
return SM&A to a past that was much better for him, but not all
stockholders.
Myers is telling you what he thinks you want to hear, not what he
can or will do. Unlike Myers, your board recognizes there are no
short cuts to better revenue, improved earnings, a higher stock
price and, eventually, long-term stockholder value. It takes hard
work.
We believe our stock has been hurt by a number of factors, including
the soft economy and continued stock market volatility that has
punished small companies such as yours. In addition, we continue to
deal with problems that had their origins in the Myers era and which
affected guidance--among them the PPI accounting treatment, account
executive turnover and a softened pipeline. Nonetheless, we are
putting in the time and sacrifices necessary to fix the Myers legacy
problems. With our strategic plan, we are well on our way.
Lastly, from the feedback we are receiving from some of our
stockholders it is clear that Myers is grossly misrepresenting the
facts to suit his position. To name a few such instances, he has
mischaracterized factors which created turnover in 2007, his ability
to re-hire people who have resigned, the continual quality of our
offering - our win rate in 2007 was the best it was in years - and
how others have committed to vote. This is his style--don't let him
fool you or charm you into thinking he can magically save the day.
If he had that capability, he should have put it to work for
stockholders while he was still here.
We urge you to get the facts. Don't rely on inaccurate,
unsubstantiated statements from Myers. They not only are materially
incorrect, they do a disservice to stockholders, our employees and
our clients.
Knowing all of this, we ask stockholders to consider the statement
they are sending to SM&A employees about what is important to
stockholders when they cast their vote.
Sincerely,
Dwight L. Hanger
Chairman of the Board
We urge you to Vote your White Proxy Card today to re-elect
your current Board and empower them to continue to guide SM&A to
future success.
The Stockholder meeting will be on Friday, May 23, 2008 with
stockholders of record as of April 9, 2008 eligible to vote.
If you have any questions or need assistance in voting, contact
MacKenzie Partners, Inc.
Toll-Free: (800) 322-2885
winsproxy@mackenziepartners.com
Please discard and do not sign any gold proxy cards sent to you by
Myers.
About SM&A
SM&A is the world's foremost management consulting firm providing
leadership and mentoring solutions to PLAN for business capture, WIN
competitive procurements and profitably PERFORM on the projects and
programs won. Our proven processes, people and tools have delivered
significant top-line and bottom-line growth across markets, products and
services. From the largest aerospace and defense contractors, through
the major software providers, to healthcare and financial/audit service
providers, SM&A is the partner many companies turn to WHEN THEY MUST WIN.
All stockholders of SM&A are advised to read the definitive proxy
statement and other documents related to the solicitation of proxies by
SM&A for use at the 2008 annual meeting of stockholders of SM&A. They
contain important information regarding the election of directors and
other matters. The definitive proxy statement and form of proxy have
been mailed to stockholders of record of SM&A along with other relevant
documents. They are available at no charge on the SEC’s
website at http://www.sec.gov In
addition, SM&A will provide copies of the definitive proxy statement
without charge upon request.
Some statements made in this news release refer to future actions,
strategies, or results that involve a number of risks and uncertainties.
Any number of factors could cause actual results to differ materially
from expectations, including a shift in demand for SM&A's Competition
Management and Program services; fluctuations in the size, timing, and
duration of client engagements; delays, cancellations, or shifts in
emphasis for competitive procurement activities; declines in future
defense, information technology, homeland security, new systems, and
research and development expenditures, and other risk factors listed in
SM&A's SEC reports, including the report on Form 10-K for the year ended
December 31, 2007. Actual results may differ materially from those
expressed or implied. The company does not undertake any duty to update
forward-looking statements.